In time series statistics, and in particular the analysis of the time series of finances for the purpose of stock trading, moving-average crossover occurs when, in planning two moving averages each based on different levels of leveling, moving cross. It does not predict future direction but shows the trend. This indicator uses two (or more) moving averages, moving average slower and moving average faster. The faster the moving average is the short term moving average. For the stock market at the end of the day, for example, it may be a 5-, 10 or 25 day period while slower moving averages are medium- or long-term moving average (eg 50-, 100- or 200-day periods). Short-run average movements are faster because they only consider prices in the short run and thus are more reactive to daily price changes. On the other hand, long-term moving average is considered slower because it sums up prices for longer and more lethargic. However, he tends to smooth the price fluctuations that are often reflected in short-term moving averages.
Moving averages, as a line by themselves, are often overlaid on price charts to show price trends. Crossovers occur when the average moves faster (ie, shorter period moving averages) across slower moving averages (ie longer moving periods). In other words, this is when the shorter period moves the average line across the moving average line of the longer period. In stock investing, this meeting point is used to enter (buy or sell) or exit (sell or buy) the market.
A special case where a simple weighted average moving average is sometimes called simple moving-average (SMA) crossover . Such a crossover can be used to mark changes in trends and can be used to trigger trading in the Black Box trading system.
Video Moving average crossover
Note
Golden Cross - There are several types of average cross-trader use in the trade. When 200 days of simple moving averages across 50 days of simple moving averages are called golden crosses. The golden cross is widely accepted.
Silver cross - When 50 cross-averages move exponentially above or below 100 exponential moving averages, known as silver cross. Silver cross created by forex trader Success S.A.Hasib. S.A.Hasib believes that the exponential moving average helps to understand current market conditions. Exponential moving averages also act as dynamic support and resistance.
- Gold crossed the bullish cross from the 20 day and 200 day moving average of NasdaQ Financial Glossary
- Death cuts a bearish cross from 20-day and 200-day moving average NasdaQ Financial Glossary
Maps Moving average crossover
References
Source of the article : Wikipedia
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